Progress without Profit: Student debt crisis hinders nonprofits

Art of hands hugging a red heart but the heart is broken. Donate boxes on the side of the heart. Darker red background. Large crack in the art.
(Nora Miller | Daily Trojan)

During the holidays, my assortment of thoughts included gingerbread, the cuteness of my dogs, TikTok and the debilitating role student loans play in the nonprofit sector. The last one was courtesy of President Joe Biden’s announcement in late December that he would extend the pause on federal student loan repayments to May 2022.

Since taking office, the Biden administration forgave $11.5 billion in student loans; a small dent in the $1.6 trillion still owed. Yet, despite the crisis these numbers illustrate, Biden likely will not implement the large-scale forgiveness of the up to $50,000 advocated for by Democrats, including Sen. Elizabeth Warren and Sen. Chuck Schumer. 

To make matters worse, private student loan companies, similar to the government, don’t look out for the best interests of students. 

Last week, Navient, a huge student loan servicing company, reached a $1.85 billion settlement deal with 39 states after claims of predatory loans. Specifically, the company put massive debts on borrowers who were unlikely to repay them. 

My generation’s drive to change the world and replace the failing structures and systems they see inspires me. Students taking on majors and minors about nonprofits and community-based programs at USC reveal the desire to better our society. 

Outside of the classroom, my peers use social media to accelerate global fundraising campaigns and local activism within communities. Yet, despite smaller opportunities to try to enact social change, student debt makes a full-time career dealing with issues that are largely unachievable.

Nearly a third of Americans have college debt, and with the average student loan debt nearing $38,792 in 2020, students often choose between a fulfilled soul versus a full wallet. Recent college graduates default to jobs that can pay off these loans — and news flash, nonprofit jobs aren’t moneymakers. 

As analyzed by Ensemble News, “according to the Bureau of Labor Statistics, on average, professional and management-related workers in the nonprofit sector make $3.36 less per hour than peers in for-profit work.” 

Nonprofit salaries inhibit the ability to pay back student loans, buy a house or start a family, driving many people away from that line of work.

In fact, low pay is one of the top reasons people leave or avoid the sector. While the argument that nonprofit workers need higher salaries deserves an entire article within itself, an additional solution to make a nonprofit career more viable is fighting the student debt crisis.

In 2007, in an effort to entice people to work in the sector, the U.S. government passed the Public Service Loan Forgiveness Program, a way for people working for the government or nonprofits to have their student debt forgiven over a 10 year period. In 2018, however, due to the inconsistencies and complexities of the program, the report revealed the government denied loan forgiveness for about 99% of applicants. While this program should have solved part of the issue, it has not made the nonprofit sector more accessible. 

To qualify for the program you must satisfy five requirements: Be employed by a government or nonprofit organization; work full-time; have direct loans; repay loans under an income-driven repayment plan; complete 120 monthly payments on their loans.

This past October, major reforms took place for a clearer path forward. As covered by CNBC, “the Department of Education will offer a limited waiver so that borrowers can have their payments counted ‘regardless of loan type or repayment plan” and “estimates the waiver will bring over 550,000 borrowers an average of 23 payments closer to loan forgiveness and make 22,000 borrowers immediately entitled to the cancellation.” This change makes it easier to qualify for the fourth step listed above and allows students to pursue more work in the nonprofit sector. PSA — this waiver must be completed by Oct. 31, so if this is something that relates to you, look into it! 

For many, an unguaranteed plan that takes 10 years to implement is not a solution. I’d rather pressure politicians to enact broad-sweeping student debt cancellations of student debt than go through the program’s bureaucracy. However, until that happens, it’s helpful to be aware of the current resources at students’ disposal for a career in the nonprofit sector. 

College provides important educational tools to understand key problems in the nonprofit sector. But, if a person cannot afford to work in the sector after graduation, that knowledge does not reach its full potential. Money becomes a consideration in all aspects of life, prohibiting people from exploring passions and enacting social change. As things currently stand, often only those financially well-off and debt-free can afford to put “changing the world” as a full-time career on their resume. 

Sophie Roppe is a senior writing about nonprofit organizations and social justice in her column, “Progress Without Profit.”